Big Four accounting firm Ernst & Young is tying a dramatic improvement in its latest audit inspection results to a multiyear investment in technology, among other changes.
The Public Company Accounting Oversight Board’s 2025 inspection of EY found Part I.A deficiencies, which indicate significant shortcomings, in only 5% of the audits it inspected, down from 28% in 2024. The 23-percentage-point improvement was the largest among the Big Four. The current rate marks a record for EY, according to the firm.
“We previously were at a rate that we believed was unacceptable, so we were very focused on improvements,” Richard Jackson, EY Americas assurance chief technology officer, said in an interview.
The inspection results came as the other Big Four accounting firms also reported lower PCAOB deficiency rates. Deloitte had a 5% rate, followed by PwC at 9% and KPMG at 13%.
EY had the highest deficiency rate among the Big Four in the previous inspection cycle. Its rate has now fallen to a level tied with Deloitte for the lowest among the four firms.
For EY, the turnaround was the “direct result” of a $1 billion investment in technology and talent to “increase audit quality, including expanded use of AI and advanced analytics, continuous learning, and shifting work so teams focus on the areas requiring the highest levels of judgment and insight,” the firm said in an emailed statement.
The technology changes focused heavily on standardizing and simplifying the audit process globally, Jackson said.
EY also worked to eliminate unnecessary audit steps and concentrate more closely on procedures tied to key risks, while investing in employee training and compensation.
The technology side of the transformation is entering a new phase, according to Jackson. The $1 billion initiative launched in 2024 included “traditional AI,” while the firm began introducing generative and agentic AI this year, he said. Those newer capabilities are therefore not reflected in the firm’s 2025 PCAOB inspection results.
EY is using its newer AI capabilities for tasks such as project management, searching across audit files and reviewing the quality and consistency of audit documentation.
Looking ahead, the firm plans to use agentic AI to “help prepare audit work products,” while human auditors retain responsibility for reviewing the output and reaching conclusions, according to Jackson.
“You have to see AI as a support tool, not a substitute for humans or human judgment,” he said.
In addition to the spending on technology, EY has sought to invest in developing younger professionals. In 2024, it said it would increase early career compensation as well as funding AI-enabled audit and tax platforms and a new program dubbed 360 Careers, CFO Dive previously reported. This year EY also doubled the bonus that it gives early-career professionals who pass all four parts of the Uniform Certified Public Accountant Examination, boosting it to $10,000 for “June 1 joiners.”
